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The election of Peltz, a founding partner of Trian Fund Management in New York, on Tuesday will expand the company's board to 14 members, Legg said. Under an agreement between Legg and Peltz, Trian has agreed to vote its shares in favor of Legg's director nominees, among other commitments.
The news was announced before the markets opened Monday.
The move comes four months after a British newspaper reported that Peltz planned to increase his stake in Legg to gain some board seats so that he could eventually push for the company's sale or breakup. Legg struggled with massive losses last year because of costs related to propping up its money market funds invested in toxic assets. The company returned to profitability in the three months ending in June.
Peltz is known as an agitator who targets companies with good brands and assets that are underperforming. Peltz pushed for the sale of fast food restaurant Wendy's to Triarc Companies Inc., the parent company of Arby's owned by Peltz, and pressured candy maker Cadbury to split itself in two.
Trian Partners owns 6.95 million shares, or 4.3 percent, of Legg's shares, up from 727,142 shares at the end of March.
Peltz said in a statement that he and his firm have been "engaged in constructive dialogue" with Legg Chief Executive Mark Fetting during the past several months.
"We share their view that Legg Mason's recent strategic initiatives are improving the Company's operating performance and I look forward to contributing as a Board member and working with the management team and the Board to help this great company achieve its full potential," he said.
In a statement, Fetting said the company welcomes Peltz as the board's newest member.
"We look forward to benefiting from his insights and experience as we work together to build greater value for our clients and our shareholders," he said.
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